Outside the Box: Guidelines for Retail Store Siting

Conflicts on Environment, Legal, Cultural and Other Grounds Seen as Growing Risk to Reputation and Shareholder Value; Guidelines Backed By Investors Representing $33 billion.July 11, 2005

New York, NY – In the wake of dozens of often bitter community-level controversies across the United States and Mexico focused on the sites selected for “mega stores,” Christian Brothers Investment Services, Inc. (CBIS) and Domini Social Investments (Domini) today issued a set of nine guidelines for major retailers to use in making decisions about store site locations, land procurement and leasing. In addition to CBIS and Domini, 20 institutional investors and mutual fund families representing $33 billion in assets under management support the guidelines.

The guidelines recommended today by CBIS/Domini urge major retailers to embrace environmental stewardship; public disclosure of siting policies; advance consultation with affected communities; respect for Indigenous cultures; protection of cultural heritage; and adherence to “smart growth” practices. While companies are encouraged to adapt the guidelines to suit their unique business models, the report strongly recommends that all retailers should have a clearly formulated, well-monitored and effective policy for assessing and mitigating social and environmental risks associated with store siting. The report also contains dozens of examples of past controversies, some positive cases, and many suggestions and resources that companies may use to minimize future conflicts.

Julie Tanner, Corporate Advocacy Coordinator for CBIS, said, “Store siting is such a central component of a retailer’s business that companies should have guidelines to avoid controversies that can endanger shareholder value. These conflicts can damage a company’s reputation and impact consumer confidence; they may also lead to financial liabilities from unforeseen events and increase legislative and legal risks. As retailers expand throughout the U.S. and abroad, we believe they must take proactive steps to engage with communities and ensure that their cultural and environmental heritage remains intact.”

Adam Kanzer, General Counsel and Director of Shareholder Advocacy at Domini, said, "Big-box retailers have encountered resistance to their growth by not thoroughly evaluating these issues. Companies have damaged their relations with communities by contributing to urban sprawl, siting stores on land sacred to Indigenous peoples, and circumventing the open market by acquiring land through eminent domain proceedings. We believe these problems can be avoided. We offer these guidelines to companies seeking to find common ground with communities."

The report includes examples of how retailers have handled store siting issues, including the following:

Community Relations: To restrict large-scale retail development, Dunkirk, Maryland, imposed a limit on the size of stores. In what some residents believed was an attempt to bypass the cap, this year Wal-Mart proposed building two stores in Dunkirk, side-by-side. While each store would meet the size limit imposed by the law, together the two buildings would exceed it by 30 percent.

Indigenous Peoples’ Rights: In October 2004, a Wal-Mart in Hawaii opened amid protests from Indigenous Hawaiians seeking prompt reburial of the remains of 44 of their ancestors that had been unearthed during the store’s construction. The company had encountered other controversies related to Indigenous peoples’ heritage in Tennessee and New York.

Eminent Domain: In recent years, a number of private property owners have filed lawsuits or mounted protests in opposition to plans by towns and cities to seize land for sale to large retailers, including Costco, Home Depot, Target and Bed, Bath and Beyond. In one such instance in New Rochelle, New York, in 2001, residents defeated city plans to condemn a small suburban neighborhood to make way for an IKEA store. This issue is likely to continue to affect retailers, despite the recent Supreme Court decision upholding the legality of using eminent domain for economic development. Communities may still be opposed to the practice, and the Court was clear that states may still enact laws limiting its use.

Smart Growth: In late 2005, Home Depot will open a store on the site of a former concrete plant in Placerville, California. The company has restored the bed of a creek that flowed through the property, landscaped its banks with native plants, provided walkways and bridges for pedestrian access, and designed the store’s façade to blend in with the California foothill community. The company was praised for revitalizing an existing business district and for not building on the outskirts of town.

Disclosure of policy and siting plans: Target includes a short section on “Sustainable Real Estate Development & Design” in its 2004 Social Responsibility Report. It notes that the company conducts environmental due diligence when acquiring property, that it seeks to site stores when possible on environmentally restored properties, and that it intends to consult with communities and local planning commissions early in the project stage.

The nine guidelines are supported by the following organizations, institutional investors and mutual fund families representing $33 billion in assets under management:

Boston Common Asset Management

Calvert Group

Catholic Healthcare West

Dominican Sisters of Springfield, Illinois

Evangelical Lutheran Church in America

General Board of Pension and Health Benefits United Methodist Church

Program Directors for Energy & Environment and Contract Supplier and Human Rights Working Groups of the Interfaith Center on Corporate Responsibility

Maryknoll Sisters

NorthStar Asset Management, Inc.

Progressive Investment Management

Sisters of the Blessed Sacrament Social Justice Office

Sisters of St. Francis of Philadelphia

Office of Peace and Justice

Sisters of St. Joseph, Nazareth, Michigan

Sisters of St. Joseph of Philadelphia

Pax World Funds

Sierra Club Mutual Funds

The Ethical Funds Company

The Oneida Trust Committee of the Oneida Tribe of Indians of Wisconsin